> For the complete documentation index, see [llms.txt](https://docs.originprotocol.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.originprotocol.com/automated-redemption-manager-arm/introduction-to-arm.md).

# Introduction to ARM

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The Automated Redemption Manager (ARM) is Origin’s onchain liquidity engine designed to enable better exit liquidity and tighter pegs for yield-bearing assets such as stETH, eETH, and sUSDe. The ARM continuously arbitrages between secondary market prices and the token’s underlying collateral to help tokens trade close to their underlying value.

By automating the redemption process, the ARM provides deep, efficient liquidity without relying on centralized market makers. It sources and deploys capital directly from ARM Vaults, generating sustainable yield from arbitrage activity while reinforcing price stability for yield-bearing tokens.

The result is a mechanism that strengthens liquidity across multiple protocols, improves capital efficiency, and enhances the overall stability of liquid staking tokens and redeemable assets.

### **How the ARM Works**

ARM Vaults allow users to trade into redeemable asset collateral (e.g stETH to ETH, sUSDe to USDe) at set prices. The ARM sets prices based on redemption times and lending market rates, and users can access atomic liquidity on stETH, sUSDe, and eETH as pricing remains competitive across DEXs.&#x20;

Once users trade redeemable assets for its underlying collateral through the ARM, the ARM Vault redeems the assets for its underlying collateral through the respective redemption queue, redeeming the asset at 1:1 and earning the spread as yield for depositors.&#x20;

When market spreads tighten and lending yields are more attractive, the ARM dynamically routes capital to external protocols like Morpho and Aave to earn additional yield.

WETH from the stETH and eETH ARM Vaults is sent to the [Morpho WETH ARM Vault](https://app.morpho.org/ethereum/vault/0x3Dfe70B05657949A5dB340754aD664810ac63b21/weth-arm-vault) to earn yield when arbitrage opportunities are not present. The vault lends to top ETH-denominated markets on Morpho, with the majority of WETH being used across wrapped stETH and wrapped eETH Morpho markets. The sUSDe ARM lends USDe on Aave V3.&#x20;

ARM rebalancing is buffer-driven. Idle liquidity can be allocated to external lending markets when it is not needed for immediate swap/redemption activity, while the configured ARM buffer determines how much liquidity remains available in the vault. Rebalancing around this buffer can be triggered permissionlessly through the allocate() fuction.

**ARM Flow of Funds**

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This creates a self-balancing mechanism that narrows peg spreads, restores market efficiency, and keeps liquidity productive in all market conditions. The ARM effectively transforms volatility into opportunity, capturing price spreads between redeemable assets and their backing collateral.

### Historical Yield Performance

During its first year of operation, the stETH ARM averaged 4.06% APY, approximately 50% above the average ETH liquid staking return of 2.67% over the same period. ARM yield is substantially more volatile than staking rewards, reflecting the strategy's dependence on secondary market pricing conditions.&#x20;

ARM yield is variable because capital rotates between redemption arbitrage and lending-market yield. In quiet markets, yield trends toward the lending-market baseline. During larger peg dislocations, redemption arbitrage becomes the dominant source of returns.

The lending floor and volatility ceiling together define the ARM's yield range: a persistent baseline from lending markets, with upside captured from market dislocations.